Zscaler buys Israeli cybersecurity co Avalor for $350m

Raanan Raz and Lior Simon credit: Ben Hakim

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Avalor was founded only two years ago and has raised $30 million to date.

US cybersecurity company Zscaler has announced that it is acquiring early stage Israeli cybersecurity startup Avalor for $350 million.

The big winners from the acquisition are Avalor's founders CEO Raanan Raz and CTO Kfir Tishbi and the initial investors including Cyberstarts, Datorama founders Ran Sarig and Efi Cohen and Israel's Jibe Fund as well as later investors including TCV, and Salesforce Ventures.

Estimates are that at the end of 2023, Avalor's annual recurring revenue (ARR) was just $3 million meaning that in its exit it has achieved a multiple of more than 100. This multiple is similar to recent large Israeli cybersecurity exits including Flow Security's acquisition by CrowdStrike for $200 million and Talon and Dig Security's acquisitions by Palo Alto Networks for $625 million and $400 million respectively.

Avalor, which has developed a platform for managing the enterprise data required by security managers, was founded two years ago and has raised just $30 million to date. It is almost unique in Israel's cybersecurity sector in that its founders did not come from one of the IDF intelligence units after specializing in the field.

Raz and Tishbi previously specialized in enterprise software and only later, and with the encouragement of the investors, did they "convert" to cybersecurity. They were among the first employees of Datorama, a company that developed systems for the automation of marketing processes in companies, which was sold to Salesforce for $800 million in 2018.

They left Salesforce to start their own company and as part of the search for an idea that would be at its core, they met with Cyberstarts partner Lior Simon. "We knew how to organize data in the marketing world and we quickly realized that there was an important need for this in the cybersecurity market as well," Raz tells Globes. "Today we know how to manage the metadata for all the components that exist in the organization: who are the users, what are the weaknesses in the organization, what is the connection between the data and the business, and we provide a kind of system that allows this information to be analyzed quickly."

Avalor's technology makes it possible to connect all of the company's data assets, from security tools to personnel management software, into one manageable user interface at the click of a button. The advantage of Avalor's technology was recognized by Zscaler's CTO, who wanted to leverage the huge amounts of data that it processes - about 400 billion information operations per day - in its cloud security platform, to connect it into a unified picture and allow its customers to prioritize threats more efficiently and swiftly.